We provide retail valuations for a number of purposes, including; loan security, asset value, inheritance tax, pension fund, and Charities Act purposes. Retail values vary significantly across Bristol, therefore it is key that the acting surveyor has strong local market knowledge.
In this instance, we were instructed to undertake a valuation of a retail unit on a popular secondary retail street in Bristol, for secured lending purposes. The property was a period, mid terrace, ground floor unit towards the end of the retail stretch.
When inspecting the property, we took note of key factors that impact value, including it’s location, prominence, and neighbouring tenant mix. We had consideration of property characteristics such as condition and specification, and measured the unit on a Net Internal Area basis. As the property was situated on a secondary retail stretch, we used the Zoning technique, which is a tool used for comparable analysis. The Zoning technique is based on the principle that the retail frontage and front sales area holds the most value. This is applied through the principle of ‘halving back’, meaning that each subsequent zone is worth half of the zone before. The unit is split into 6.1 metres zones, Zone A is at the front of the unit, with the value decreasing with distance from the frontage: Zone B is the next 6.1 metres, then Zone C, with anything after Zone C typically defined as the remainder. We also consider the value that the ancillary areas will demand, and the property characteristics such as masked or stepped areas, making allowances for these if required. This analysis results in determining the area In Terms of Zone A (ITZA).
As the retail unit was occupied under a lease, we undertook the investment method of valuation. We sought similar recent retail investment transactions, which we analysed, considering a range of factors such as location, condition, covenant strength and unexpired lease term, in order to select an appropriate yield for the subject. To determine a Market Rent we had consideration for recent transactions on the secondary retail street itself, having particular regard for the position and prominence of the retail units, in comparison to the subject.
For each comparable property we analysed the rent against their ITZA floor area, in order to compare them to the subject. In this instance we determined that the subject was under rented, therefore, we carried out a term and reversion valuation, using the selected yields and our opinion of Market Rent, after deducting purchaser’s costs we derived a Market Value for the property.
Retail valuations can be complex, however, due to our strong local market knowledge, underpinned by our technical ability, we provided the client with an accurate and detailed valuation report.
Our experienced team is ready to assist with unparalleled regional advice.
